1.1.5 Specialisation and the division of labour Flashcards
What is Specialisation?
- Specialisation refers to the process by which individuals, firms, or regions concentrate their efforts on producing a narrow range of goods or services in which they have a comparative advantage.
- Specialisation is often based on the principle of comparative advantage, which suggests that individuals, businesses or countries should focus on producing goods or services in which they are relatively more efficient or have lower opportunity costs compared to others
What are the types of Specialisation?
- By producers - each of which specialises in a particular type of product (means we must trade to satisfy our wants and needs)
- Within the production process - the division of labour (No one worker makes the whole product, each worker specialises in a specific small part of the production process)
What does Specialisation lead to?
- Trading to satisfy our wants and needs
- Higher output in the same time/with same resources = higher productivity (output per worker)
- Higher living standards – because more goods and services are produced with a given set of resources
What are the advantages of Specialisation?
- Higher labour productivity and business profits
- Specialisation creates surplus output that can then be traded internationally
- Lower prices, higher real incomes and GDP growth
- Quantity of output increases in a given time period
- Specialising enables countries to concentrate on what they are best at producing.
- Unit cost falls
- Productivity increases, increased output per worker
- Better quality product produced
- More efficient
- Allows increased use of machinery
What are the disadvantages of Specialisation?
- Unrewarding, repetitive work that requires little skill can lower motivation and eventually causes lower productivity.
- Workers may take less pride in their work and quality suffers.
- Many people may choose to move to less boring jobs creating a problem of high worker turnover for businesses.
- Some workers receive little training and may not be able to find alternative jobs if they find themselves out of work - they may then suffer structural unemployment / occupational immobility
- Mass-produced standardised goods lack variety for consumers.
- Concentrating on a narrow range of products may prove to be unwise if demand for the product falls.
- Costs of producing the product increases and difficulties may arise in producing the products.
- Fewer people may want the products if tastes change or competitors start to produce them more cheaply.
- Demand for the product may remain high but there are problems meeting the demand.
- Output can be disrupted or destroyed by poor weather conditions and disease. E.g. agricultural
What is Division of Labour?
- The division of labour occurs where the production process is broken down into many separate tasks.
- Division of labour can raise output per person as people become proficient through constant repetition of a task.
- This is called learning by doing.
E.g. In vehcile manufacturing each worker on an assembly line has a specialised task, such as installing a specific component or performing a particular operation
How did Adam Smith describe the Division of Labour?
In 1776, Adam Smith, in his book Wealth of Nations, famously described the division of labour among workers in a pin factory, and stated that:
“A workman not educated to this business… could scarce… make one pin in a day, and certainly could not make twenty. But in the way in which this business is now carried on, … it is divided into a number of branches. One man draws out the wire, another straightens it, a third cuts it, a forth points it, a fifth grinds it at the top for receiving the head; to make the head requires tow or three distinct operations; to put it on is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper.”
Smith went on to point out that if a worker knew all the processes to making pins he could make up to 20 pins each day when working alone, but ten workers, each specialising in one part of the production process could make up to 48,000 pins a day.
What are the advantages of Division of Labour?
- Quantity of output increases in a given time period
- Unit cost falls
- Productivity increases, increased output per worker
- More efficient.
- When workers are performing a limited range of tasks they can be trained more quickly.
- Cuts costs by reducing the amount of equipment each worker requires.
- Allows increased use of machinery
- Saves time as workers do not have to move from one job to another.
Disadvantages of Division of Labour
- More boring, less varied work
- Motivation is reduced
- Use of machines can reduce skills levels
- Mistakes can’t be spotted easily
- Workers lack other skills, increases interdependence
- Quality can go down
- Specialisation of its labour force may also reduce a firm’s flexibility. If a specialised worker is ill, if demand for a particular task rises quickly, other workers may not be able to perform the function.
- Workers who have been trained to perform just one or few tasks, may find it difficult to find alternative work.
What are the sectors of the economy?
- Primary Sector: raw materials are extracted and food is grown e.g. agriculture, fishing and mining
- Secondary Sector / Manufacturing Sector: Raw materials are transformed into goods e.g. motor manufacturing, food processing, steel production
- Tertiary / Service Sector: Provides services such as transport, sport and leisure, financial services, education and health
What are Public and Private Sectors?
- Public Sector: the state or the government sector of the economy
- Private Sector: Part of the economy owned by private individuals, companies and charities
What are Markets?
A market Is any convenient set of arrangements by which buyers and sellers communicate to exchange goods and services
E.g. Buying and selling can take place online, Newspapers and magazines, High street shopping centres
What are Submarkets?
A submarket is a market within a larger market
E.g. The market for diesel fuel in the UK is a sub-market of the market for all oil-based fuels in the UK. Equally the market for all oil-based fuels in the UK is a sub-market of the international market for fuels
